Judges Realize Aereo's Setup Is Insane Technologically... But May Get The Wrong Message Out Of It

from the that's-unfortunate dept

A few months ago, we wrote about law professor James Grimmelmann's awesome article about how copyright law for media streaming was completely insane from a technological standpoint:

Suppose I could offer you a choice of two technologies for watching TV online. Behind Door Number One sits a free-to-watch service that uses off-the-shelf technology and that buffers just enough of each show to put the live stream on the Internet. Behind Door Number Two lies a subscription service that requires custom-designed hardware and makes dozens of copies of each show. Which sounds easier to build—and to use? More importantly, which is more likely to be legal?

If you went with Door Number One, then you are a sane person, untainted by the depravity of modern copyright law. But you are also wrong. The company behind Door Number One, iCraveTV, was enjoined out of existence a decade ago. The company behind Door Number Two, Aereo, just survived its first round in court and is still going strong.

The issue, of course, is a series of lawsuits that have really only displayed how copyright law written for legacy technologies has no idea how to deal with streaming media. After each one, companies try to figure out how to make a legal service, which seems like a noble goal. However, because of all the ridiculous specifics in rulings where judges contort themselves to come up with a way to fit a ruling into their preconceived notions of what's legal and what's not, the end result is that if you want to design a legal service, you have to set up a truly twisted and confusing setup... like Aereo's.

That issue has come up in the appeal on the district court Aereo decision. The TV networks are trying to convince the appeals court that the lower court was wrong. There was a lot of focus on trying to distinguish Aereo from the same court's ruling in the Cablevision case four years ago, which said that a remote DVR offered by Cablevision was legal. However, apparently there was an interesting exchange in which the judges seemed to realize that Aereo's setup was technologically insane:

The judges also questioned Hosp on why Aereo needed to have all those antennas. "Why not one? Is there a technological reason? Any legitimate business reason?"

Aereo's lawyer, David Hosp, admitted that the reasons were legal. This is the point at which people should realize that this demonstrates one of the many ways that copyright law is broken, because it forces companies to go through all sorts of convoluted technological decisions to deliver the same experience that could be delivered much more easily and efficiently otherwise. Instead, the judges seemed concerned in the other direction, that if the decisions were done for a legal reason it was somehow a sign of ill-intent:

One judge also observed, "You say your model is built around Cablevision. Isn't that like organizing your business affairs to avoid taxes?"

That, of course, is a ridiculous analogy -- and thankfully Hosp responded correctly: following what the court said was legal in earlier cases isn't about "avoiding" anything, it's about following the court's instructions on how to stay legal!

"The plaintiffs say it is a bad thing to follow the law," he said. "I believe the 2nd Circuit got it right in attempting to strike the right balance between public and private performances that lawmakers wanted."

Anyway, it wouldn't be surprising to see the court overturn the district court ruling, no matter how ridiculous a result that would be. It really feels like a lot of these cases are judged based on a judge deciding what he "feels" should be legal, and then trying to work in a justification later.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Anyway if the judges in this case are going to use the tax analogy, Aereo's lawyers should say there is no public duty in arranging their business to pay more the plaintiffs.

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I absolutely love that this is the top comment and voted insightful. The analogy is actually not ridiculous at all, much like Aero's business so-called 'tax dodging' is also completely legal and explicitly follows the letter of the law but is often decried by demagogues as if this explicit following of the law damns it.

It's all about stamping out the competition and making sure that you have absolutely control of the market. Whatever you do even if its legal the MPAA and copyright holders will do everything to make sure you don't succeed.

Re: Since when is copyright supposed to be sane?

Excuse me, sir, but it appears your keyboard may be malfunctioning. It seems that, for every time you hit the "space bar" after a period, your keyboard interprets that as pressing the "enter" button twice. You may wish to get that looked at to make your posts more readable.

Re: Since when is copyright supposed to be sane?

Copyright has so many rationalisations covering the fact that it cannot possibly work, and you've just listed a few of them.

All these copyright exceptions... and rationalisations... and obscurities... and ridiculous concepts that a child could see through.

Am I the only one here sane enough to call upon Occam's Razor, and say that the simplest explanation is probably the best one: get rid of copyright law, and see how the Darwinian evolution of business models finds ways to give creators incentives without government subsidised monopolies?

Re: Since when is copyright supposed to be sane?

You missed a few:

Installing a Root-Kit on the boot sector on your hard disk to refrain you from ripping your CD into an MP3 format.

Installing DRM on your computer without knowledge or conscent and then after 3 reactivations of your game...which occurred as one activation/renewal per every 3 month time period after you install it thus turning your game into a shiny coaster for your PC's desk.

Heard this before

This is similar to arguments I've had in the past with people claiming that internet companies who set up their businesses so that they fall within the Safe Harbor provisions are somehow "cheating" the system by residing in the "legal grey areas".

This whole argument is downright stupid. First off, there really isn't such a thing as a "legal grey area". Something is either legal or it isn't. Period. Until a court or legislative body declares something illegal, it's legal.

And the whole "cheating" part is just plain silly. It's like saying that using the US Tax Code to get an extra couple of bucks on your Federal refund is "cheating".

Re: Heard this before

This whole argument is downright stupid. First off, there really isn't such a thing as a "legal grey area". Something is either legal or it isn't. Period. Until a court or legislative body declares something illegal, it's legal.

I wish it were that easy. One major job of the Supreme Court is to deal with the situation where two of the circuit courts have ruled differently on the same question; the Supremes will usually accept those cases so one unifying ruling can be made (and so the cases don't get sent to the Supreme Court again if they do it right).

The problem with the tax code is that there are a number of places where things are open to interpretation; those are certainly "legal grey areas" since which examiner you get during your audit/colonoscopy results in whether you chose right or not.

Once a system gets complex enough (taxes, law, even coding); once you have "interpretation" you get into "grey areas" (legal or not is just a point of view from there...)

It's you who mis-read a bad business model:

>>> One judge also observed, "You say your model is built around Cablevision. Isn't that like organizing your business affairs to avoid taxes?"

IF your biz requires technological contortions to be legal, then that's the problem. Copyright, as you sometimes mention, is a granted monopoly, so grifting around it is difficult. Don't invest in that model, then. Let the poor consumers "suffer" for lack of whatever crap this is.

Re: It's you who mis-read a bad business model:

IF your biz requires technological contortions to be legal, then that's the problem.

Exactly.

however: "grifting around it is difficult"
is not at all true. grifting around it is bloody simple. The technological contortions are only needed to try to follow it. Thats the whole point.
If they were contorting to get around the law, the law makes things difficult for criminals. Since they are contorting to follow the law, the law makes things difficult for law abiders.

Re: It's you who mis-read a bad business model:

IF your biz requires technological contortions to be legal, then that's the problem.

Agreed! And since the legacy players are protected by the law, they obviously know the market the best so they are best poised to judge the contortions!

This is why, despite all the crazy talk on here from people who have never made a multi million dollar media empire, that the current system works and serves the customers optimally. Which is why piracy is nonexistent....oh wait.

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Well, if it's broadcast over the air channels throughout the city, Aero has every right to re-transmit them. You don't need cable for practically everything involving local news, PBS, or anything else transmitted over the air and can certainly legally retransmit the signal to others. Cable companies do it all the time VIA Satalite.

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Over the air broadcasts are often put through cable and satalite connections on a regular basis. They don't have to pay for them either. The TV networks are trying to get Aero to pay for retransmition of OTA when they don't have to do it themselves...does that seem fair to you?

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Its up to broadcast stations whether they want to charge or not. They have the option of requiring the cable/sat to carry their channel if they operate in the same market (known as must-carry), but they can't charge for it, or they can choose to charge a re-transmission fee.

Since broadcast channels are some of the most desirable channels by a majority of mvpds customers, most stations choose re-retrans fees.

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It's the same as cable except for the part where there's no retransmission because there's an individual transmission for each user? And this is what you're using to say it's the same and there is retransmission? Someone's dumber than they look...

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I think it's the transmitting that earns them value, not the content itself. Otherwise, every antenna manufacturer would be out of business. Besides, doesn't the whole movie industry revolve around capturing content for free with their movie cameras and then charging others for it? Since when is that a problem? How about a water delivery company?

Kerry packer one of the original media moguls in Australia (and one that was a major thorn in Mordoch's side - when he was an Aussie - in stopping papers owning TV rights) had an Investigation done into his business by the Australian Tax Office.

During the public hearings for this inquiry he was asked point blank about his Tax minimisation schemes his reply echoed through the corporate world, pissed off the Tax Department and Govt, but is quintessentially Aussie and should be tattooed onto EVERY TAX PAYER's HEAD WORLD WIDE

"Of course I am minimising my tax. And if anybody in this country doesn't minimise their tax, they want their heads read, because as a government, I can tell you you're not spending it that well that we should be donating extra!"

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Although there is a fine line between minimising and avoiding - look at Starbucks in the UK!

Minimising your taxes is prudent. Seriously contorting to avoid paying any (or only a tiny percentage) is taking the mick. Especially if you wish to make use of those perks granted by being in a civilised country like roads, police, fire services and a general rule of law.

With regards to Aereo, if the end receiver doesn't need to pay to receive the channels, why should Aereo have to pay to 'format-shift' transmission?

Anyway, it wouldn't be surprising to see the court overturn the district court ruling, no matter how ridiculous a result that would be. It really feels like a lot of these cases are judged based on a judge deciding what he "feels" should be legal, and then trying to work in a justification later.

Yes, because all judges--like His Holiness Michael Masnick himself--should start with their conclusions and work their way backwards. Only Mike the Perfect could invent a legal system that anticipates things that don't even exist yet. I hope that one day everybody on this planet is as perfect as Mike. He tears apart everything and everyone so perfectly, yet is so completely to respond like an adult to even the slightest, most simple criticism of himself. Such awesomeness, sadly, will probably never manifest itself in a human being ever again.

Creating Facts

What it comes down to is that Aereo can "create facts," at a reasonable cost. If the court does not accept the present technological arrangement, Aereo will simply have to build something further out, until the legal collateral damage of blocking Aereo becomes unacceptable. For example, Aereo can have its customers install hardware by remote control, using a robot and a webcam. At a certain point, if the judges try to go too far in pursuing Aereo, they will put every safe-deposit box at risk, and every storage locker, and every residential landlord who has ever collected and stored property belonging to a departed tenant, and every hotel which refrains from inspecting the hard disks of guests' laptop computers, etc., etc. We manage to live in a dense society by recognizing all kinds of partial property rights, including things like leases, condominiums, etc.

Come to that, a bank safe-deposit box is fundamentally inefficient in mechanical design. It is designed to implement a chosen legal relationship, to make the banker a landlord instead of a "bailee." The tenant has a key to secure the box itself, not a very burglar-proof key, but good enough to create the offense of burglary. The bank controls the outer door of the vault, and doesn't have to take general responsibility for the contents of the the safe-deposit box.

I was reading an article in Trains Magazine about the Auto-Train, which moves passengers and their automobiles between the Washington D. C. area, and Sanford, Florida, just outside of Orlando. The typical customer is a "snowbird" going south for the winter, who isn't up to the long drive, but wants to take his automobile with him to drive around in Florida. Amtrak is a bailee in respect of the automobiles. An Amtrak employee (*) gets in the passenger's automobile, and drives it onto a railroad transporter car, and parks it. Amtrak takes pictures of every automobile being boarded which has any damage, so that they can prove, at need, that they didn't do the damage. And the same business at the other end. The railroad is responsible for getting the automobile onto the transporter car, and off again, without it getting dented.

(*) With typical railroad romanticism, Amtrak chooses to call this employee a "hostler," a hostler traditionally being the locomotive engineer who drives a steam locomotive from the "roundhouse, the locomotive repair and servicing facility, into the station, and hooks it up to a train.